Cohen v. Parish , 105 Ga. 339 ( 1898 )

Little, J.

The preceding official report furnishes all the information necessary to a clear understanding of the facts of the ca,ge, and sets out the grounds on which it is sought to have the judgment of the court below reversed.

1. Exception was taken to several distinct parts of the charge of the court. The instructions contained in these extracts from the charge, on which error is assigned, we construe to be in harmony with the principles of law applicable to the case, and which are hereafter discussed. It is our opinion, as hereafter shown, that the court committed no error in admitting evidence. The final determination of the case on its merits depended upon the facts whether, at the time of the conveyance from Bryan to John T. Parish as trustee, Parish was solvent or insolvent, and whether he caused such deed to be made in good faith, or with the intent to hinder, delay, or defraud his creditors. Much evidence was introduced to sustain the respective contentions of the parties. The jury, having been as we think properly instructed by the court, by their verdict solved-these questions of fact in favor of the petitioner, and we.are not at liberty to reject their finding, inasmuch as there was sufficient evidence introduced on the trial on which such a verdict could be rendered ; and it will not therefore be set aside as contrary either to law or to the evidence, after its approval by the trial judge.

2. This is the second time the case has been before this court. On the first trial a verdict was rendered for the petitioner, and on the refusal of the trial judge to set aside the verdict and judgment rendered thereon the defendant assigned error, and this court reversed that judgment. 100 Ga. 335. The second trial resulted in a verdict for the plaintiff, which, as it appears here, was made satisfactory to the presiding judge in the court below, who refused to grant a new trial on motion of the defendant, and the judgment so refusing has been brought here and is sought to be reversed on the grounds appearing in the official report. The issue upon which the case turns is,, whether the deed of trust, under which the petitioner claims,, was void as against the defendants, either by reason of having been made at a time when J ohn T. Parish was insolvent, or rendered insolvent by such transaction, or having been made at the instance of J ohn T. Parish to hinder, delay, or defraud his creditors. The plaintiffs in error contend further that this deed of trust was made without a consideration to support it, and also that they have acquired by prescription a good title as against the petitioner. On the former trial it was claimed by the petitioner that the deed of trust which was made by Bryan to John T. Parish as trustee for petitioner, was made by the direction of said Parish for the purpose of paying to the cestui que trust a debt which Parish owed to her by reason of having misappropriated the proceeds of a homestead estate of which she was the sole beneficiary. On the present trial, however, petitioner rested the validity of the deed of trust, not upon a valuable consideration, but upon a good consideration — that of blood, and claimed that it was made at a time when the said John T. Parish had a right so to have it made, he being solvent, and that he acted in good faith, and without any intent to hinder, delay, or defraud his creditors. In determining therefore the relative rights of the parties to this action, the deed of trust must be treated and regarded as a voluntary conveyance, so far as the creditors of John T. Parish are concerned.

By section 3569 of the Civil Code, it is declared that “An insolvent person can not make a valid gift to the injury of his existing creditors,” etc., and paragraph 3 of section 2695 of thaJ Code, which defines what acts shall be void as against creditors, includes within such acts: “Every voluntary deed or conveyance, not for a valuable consideration, made by a debtor insolvent at the time of such conveyance”; while paragraph 2 of that section, embraces within such acts: “Every conveyance of real or personal estate, by writing or otherwise, and every bond, suit, judgment and execution, or contract of any description, had or made with intention to delay or defraud creditors, and such intention known to the party taking,” etc. While, therefore, this rule of law that every voluntary conveyance, not for a valuable consideration, made by a debtor insolvent at the time of its execution,' shall be void as against creditors, and that every conveyance made by a debtor, whether' solvent or insolvent, with intention to delay or defraud creditors, and such intention known to the party taking, shall likewise be void, is mandatory and admits of no exception (King v. Poole, 61 Ga. 374), yet it is well settled that a person may, though in debt at the time, make a voluntary conveyance under such circumstances as that it will be valid and binding even as against existing creditors. In the case of Clayton v. Brown, 17 Ga. 220, the court, referring to this question, said: “Ear be it from us to controvert the rule that a gift or conveyance, founded merely upon a good consideration, such as blood or affection, may not be set aside by creditors, if it appear that the grantor was in embarrassed circumstances when he made it. Eor it has been well said that a man must be just before he is generous; and that he i§ bound both legally and morally to pay his debts before giving away his property. Still we do maintain that the mere fact that a man is indebted at the time will not render his gift, ipso facto, void”; in support of which many authorities are cited. In the case of Weed v. Davis, 25 Ga. 684, the rule is laid down that: “A person, though in debt, may in good faith make a voluntary conveyance of a part of his property, if the part which he retains is amply sufficient to pay his debts.” So in the case of Brown v. Spivey, 53 Ga. 155, it was held that a voluntary conveyance made by a husband solvent at the time, to his wife and children, was binding as against creditors. The same principle was recognized in the case of Trounsbine & Co. v. Irving, 91 Ga. 92, and. many other of our reported cases.

The plaintiff at the last trial having conceded that the trust deed under which she claimed was not supported by a valuable consideration, such deed was, as to creditors, as was ruled by this court on its former review of the case, prima facie fraudulent; and the plaintiff carried the burden of proving that it was valid, by showing, not only the solvency of the father, but also that the deed was bona fide, and not made with the intention to hinder, delay, or defraud creditors. On the trial, there was evidence for the plaintiff tending to show that at the time the father directed the land to be conveyed to him as trustee for her, he had, in addition, cash in hand which considerably exceeded his entire indebtedness in amount. There was also evidence for the plaintiff, tending to show that her father honestly believed that he was indebted to her for the proceeds of the homestead which had been misappropriated by him, and that he in good faith, and without any intention of hindering, delaying, or defrauding his creditors, directed the deed to be executed to himself as trustee for his daughter, in order to make reparation for the misappropriated proceeds of the homestead estate. Under the ruling of this court in the case when before here for review, if it is true that the father at the time of the conveyance had in hand more than sufficient money to pay all of his debts, he was not, within the meaning of section 2695, paragraph 3, of the Civil Code, insolvent. There was sufficient evidence introduced at the trial to warrant the jury in finding that the father had a sufficient amount of money to pay all of his indebtedness at the time of the execution of the trust deed; and also sufficient ■evidence to warrant the jury in finding that, in directing the trust deed made, the father acted in good faith, and without any intention to hinder, delay, or defraud creditors. It must, therefore, follow that the jury, in passing on this evidence, found that the ■conveyance was not void as to the defendants for any of the reasons stated. As we have said, the validity of the deed from Bryan to Parish as trustee for petitioner in no way depended on the question as to whether at the time of its execution Parish was moved to have the deed executed because of his belief that ho was indebted to his daughter. If in fact he was so indebted, then the consideration between the trustee and the cestui que trust would be a valuable one. If on the contrary he was not so indebted, the relation of parent and child was sufficient to afford a good consideration. It suffices to say that he caused the deed to be executed, and if on any account the reasons which caused such execution on his part were unfounded, the trust deed nevertheless vested the beneficial interest in the cestui que trust, which could not be recovered by the action of any creditor on account of the voluntary character of the deed, but would be subject to be set aside at the instance of Parish alone, if in fact equitable grounds existed therefor; and, without any effort on his part to bring this about, it would be held to be a gift by the father to the daughter.

The jury having determined that the deed of trust was valid, •it remains to inquire whether the sheriff’s deed, and that executed to the defendants by John T. Parish as trustee for the plaintiff, passed title to the grantees as against the cestui que trust. In addition to the sheriff’s deed, Cohen claimed under a deed executed by John T. Parish, trustee for his daughter, Minnie Laura Parish. The consideration of thi.s deed was shown, at least in part, to be the settlement of a debt which Parish individually owed to Cohen. Claiming under a deed executed by Parish as trustee, Cohen Avas charged with notice of the trust estate. Bazemore v. Davis, 55 Ga. 505. It is undoubtedly true that, under the terms of the deed creating the trust, Parish had a right, at his own volition and without an order of court, to sell and convey this trust property. The proceeds of such sale, however, if any should be made, Avould belong to the cestui que trust, and must in the hands of the trustee be held for her benefit. The trustee had no right, under the poAver of sale given to him, to sell the trust property and convey the title in payment of his individual debt. Such a conveyance would be a direct misappropriation of the trust property, and Avould carry no title to the grantee Avhose debt was so paid. Cohen recognized the existence, if not the validity, of the trust, and the fact that title Avas held for the benefit of the petitioner, by accepting the conveyance as that of a trust estate, the validity of which depended on the right of the trustee to convey; he took the property, in part at least, in satisfaction, not of a debt due to him by the trust estate, but of a debt due to him by Parish individually. This was a diversion of trust property, if the trust in fact existed, to which Cohen was a- party with knowledge, and, assuming the existence of the trust as the jury have found, his rights are to be governed by the provisions of section 3200 of the Civil Code, which declares: “All persons aiding and assisting trustees of any character, with a knowledge of their misconduct, in misapplying assets, are directly accountable to' the persons injured.” The principle thus announced in the ■code was applied in the case of Maynard v. Cleveland, 76 Ga. 52, where it was held that a payment of a note due a trust estate, by allowing a credit on the trustee’s individual indebtedness to the payer, is not valid against the trust estate. So that, if there was in law a valid trust — dliat is to say, if in this case the father caused the deed of trust to be made at a time when he was solvent, and was not rendered insolvent by such transaction, and this action on his part was not had for the purpose of hindering, delaying, or defrauding his creditors, both of which facts the jury must have determined in setting up the trust, neither the sale of the land by the sheriff under execution issued against John T. Parish,individually, and with which the cestui que trust had no connection, nor the deed of conveyance made by Parish to Cohen in consideration of the payment of the individual debt of Parish, were, as a matter of law, valid, and the grantee took nothing by either one of such conveyances.

3. As we have before said, the issues to bo tried under the pleadings in this case being the solvency or insolvency of Parish, and whether he caused the conveyance to be made to hinder, delay, or defraud his creditors, it was competent, as bearing in •some degree on the question of intention, to admit in evidence the declarations made by Parish at the time of the execution of the conveyance, as to his reasons for having the conveyance so made. The plaintiff introduced Bryan, who testified that at the time he closed with Parish and conveyed the land to him as trustee for his daughter, Parish stated to him that he had some money belonging to his daughter and would take the property of the witness in part-pay for his place. For the plaintiff, Parish also was allowed to testify that his intention in having the deed made to his daughter was to pay money he owed her, and to set it aside for her so it would school her. A copy of the exemption set aside‘on the application of Eva Parish in 1876, and also a copy of the proceedings under which the homestead property was sold, including the petition and order of the court, were .allowed in evidence over the objection of defendants. Concerning the homestead property, Parish was also allowed to testify that after its sale he vacated the property and received the sum of five hundred dollars from Henson, who went into possession. We think this-evidence was properly admitted, not as proof of the facts stated, but solely as evidence of the circumstances surrounding Parish at the time, and as to some extent at least bearing on the question of what was his intention in having the deed so made, and as tending to show the absence of fraud. This seems to have been the view of the presiding judge, who, in his charge to the jury, instructed them that this evidence was not sufficient to show that there was a valuable consideration moving from the daughter to the father, nor should the evidence he considered as proof going to establish any other facts than that of intention and the absence of fraud. Whether Parish was acting in good faith or whether he was contriving to defraud his creditors were questions of fact to be determined. It was therefore proper to admit this evidence as showing the acts and words of Parish dono and spoken at the time in order to ascertain his motive. Section 5179 of the Civil Code provides that: “Declarations accompanying an act, or so nearly connected therewith in time as to be free from all suspicion of device or afterthought, are admissible in evidence as part of res gestae.” Section 5176 of the Civil Code declares that “When, in a legal investigation, information, conversations, letters, and replies and similar evidence, are facts to explain conduct and ascertain motives, they are admitted in evidence, not as hearsay, but as original evidence.” In the case of Carter v. Buchannon, 3 Ga. 513, the court says: “Res gestee are the circumstances, acts, and declarations which grow out of the main fact, are contemporaneous with it, and serve to illustrate its character.” And in the case of Clayton v. Tucker, 20 Ga. 452, the court held: “Declarations which accompany an act, and Avhich are such as may well explain the act and be a part of it, are admissible as evidence along with the act.” Thus, in the case of King v. King, 45 Ga. 644, the court ruled that: “Where the fact that complainant went to Rome to receive tbe confederate money was proven, her reasons stated at the time for her act should have been received as part of the res geste.” And in the case of McLean v. Clark, 47 Ga. 24, the court ruled: “Declarations of a vendor of property, as to his motives for the sale, made at the time and during the progress of the sale, and even so soon thereafter as to be free from all suspicion of afterthought, are admissible evidence on a trial as to the validity of the sale.” It is also held that “a party may testify to his intention. It is evidence to be considered, but the facts — all the facts — are to be considered, to arrive at the truth respecting his real motive.” There can be no question that the evidence objected to was admissible as part of the res geste of the transaction resulting in the execution of the trust deed and as throwing light upon the issue as to the real intention and motive of the father in directing the trust deed to be made. Although the documents and declarations may not have been competent evidence as to the truth of what they contained or recited, they were admissible as bearing upon and tending to illustrate the motives actuating the father at the time of the execution of the trust deed.

Judgment affirmed.

All the Justices concurring.